REG - Cropper(James) PLC - Trading Update

James CropperAnnouncement

23/03/2022 07:00

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RNS Number : 6765F  Cropper(James) PLC  23 March 2022

23(rd) March 2022

 

Trading Update

James Cropper plc (AIM: CRPR)

 

James Cropper plc ('CRPR' or the 'Group'), the leading advanced materials and
paper products group, today issues an update on trading and the impact of
worldwide wholesale gas price rises.

 

As previously announced, the Group has experienced strong demand throughout
the year and across all divisions, with over 30% sales growth in the current
year to 26(th) March 2022, which is ahead of previous market expectations.

 

However, as a direct result of the wholesale gas price increases impacting Q4
and subsequently, the profitability of the Paper division, our expectations
for the full year will be for adjusted* PBT for the Group of £3.5M (FY2021:
£1.1M) against previous market expectations of adjusted* PBT of £4.9M.

 

While the situation in Ukraine has resulted in uncertainty concerning the
Paper division's input costs in the short term, the long term opportunity for
the Group remains positive, and we are encouraged by our ability to flex
pricing to respond to rising input costs. Building on a strong track record of
growth, the year is expected to deliver a new sales high across the Group. We
continue to maintain a strong financial position, with transformation
programmes well in advance to transition away from natural gas across all
Group divisions.

 

The Group has recently secured new credit facilities to support investments
and other growth programmes. The £4m Government provided COVID related loan
facility, CLBIL, has been repaid in full and undrawn facilities stand
comfortably at £20m.

 

 

Technical Fibre Products (TFP)

TFP was nominally impacted during the prior pandemic year and has demonstrated
over 20% growth this year, which will exceed market expectations whilst
maintaining pre-pandemic margin levels. The outlook for TFP, which is not
significantly exposed to energy costs, remains strong.  The new production
line, commissioned in 2021 and adding 50% production capacity, is now fully
operational and is being utilised to support additional demand from hydrogen
markets with further capacity required beyond 2024.

 

TFP Hydrogen, acquired in January 2021, is performing well compared to our
expectations. The strategic rationale for the acquisition has been proven and
it has added a significant new set of complementary products and services to
TFP's core offerings building further on our hydrogen proposition. Additional
production capacity has been introduced in the US in preparation to support
local markets. Further hydrogen plating capacity is planned for TFP to meet
the needs of strong market demand.

 

Colourform

Colourform, which had grown by 9% during the previous pandemic year, is
expected to have further sales growth of 20% this year. New contracts have
been awarded and commercialised in the wine, spirits, and perfume markets,
delivering renewable and recyclable packaging to leading global brands such as
Ruinart, L'Oréal and Dries Van Noten. The outlook for Colourform, which is
not significantly exposed to energy costs, remains unchanged.

The business has invested in product design and print capability and will
continue to invest in further capacity and capability.

Paper

Paper was the most significantly impacted part of the Group through the
previous pandemic year. Nevertheless, all customers were retained, and demand
has quickly returned. With new additional customers and contracts won, sales
have grown over 30% in the year.

 

The start of the Russia/Ukraine conflict and the resulting jump in energy
costs has, however, significantly affected Paper, which is by far our most
energy-intensive division, The average wholesale gas price has moved from
50p/therm to over 250p/therm, peaking at 800p/therm in Q4. This has materially
impacted the recent profitability of the division. Actions have been taken: in
addition to recent price increases, a customer energy surcharge is being
implemented to mitigate the impact moving forward.

 

Plans to decarbonise the Paper division have already been made. The plan is to
move away from gas entirely by 2030. Towards this end, some technologies have
been implemented in the current year. These, combined with additional advances
to come this next year, will reduce our carbon emissions and our dependence on
gas.

 

Paper will continue to drive the product portfolio towards higher-value
products, supported by investment in additional embossing capacity.

 

 

Other information

 

The financial information on which this trading statement is based has not
been reviewed and reported on by the external auditors.

 

Year-end results

The results for the year ending 26 March 2022 are scheduled for release on 21
June 2022.

 

*Adjusted for IAS 19 impact

 

For further information please contact:

 

Enquiries:

 James Cropper PLC (AIM: CRPR)                              Shore Capital

 Phil Wild, Chief Executive Officer                         Robert Finlay, Henry Willcocks

 Isabelle Maddock, Chief Finance Officer                    John More

 Jim Aldridge, Company Secretary                            Tel:  + 44 (0) 20 7601 6100

 Tel: +44 (0) 1539 722002

 www.jamescropper.com (http://www.jamescropper.com/)

 

 

The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU No. 596/2014) (the "UK MAR") which is part of UK
law by virtue of the European Union (Withdrawal) Act 2018. The information is
disclosed in accordance with the Company's obligations under Article 17 of the
UK MAR. Upon the publication of this announcement, this inside information is
now considered to be in the public domain.

 

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